Nursing homes' reactions to rising vacancy rates

As little as a generation ago, most people anticipated that when they would no longer be able to care for themselves at home, they would enter a nursing facility. Nursing homes were the primary provider of long-term care and a necessary method for fulfilling the needs of elderly or disabled individuals. Today, nursing homes are still a major provider of long-term care services, presenting individuals with medical care, skilled nursing care, and rehabilitative services. However, they're no longer the only way for individuals to receive that type of care, and many nursing homes are feeling the impact as they struggle to keep the beds filled.

Understanding the vacancy rate stats, the factors leading to those statistics, and how nursing homes are coping is crucial in order for facility owners to successfully navigate skilled nursing care into the future.

With their many years of experience in assisting seniors and facility owners with Medicaid-sponsored nursing home care, Senior Planning Services would like to discuss and shed light on the topic.

Vacancy rates: The statistics

Across the nation, the median occupancy rate in nursing homes now sits at 87.4% — a number that's increased since 2006's 85% occupancy rate, but is still well below the 95% industry gold standard. Many states have less than 75% occupancy in a majority of their nursing homes. Connecticut's occupancy rate — now only slightly over the national average at 87.5% — has been on a slow decline: in 2006, Connecticut experienced a 93.6% occupancy rate. While some nursing homes are able to manage their staffing and overhead costs to help deal with the fluctuation in vacancies throughout their nursing homes, others are being hit hard by the nursing home slump.

Factors leading to vacancies

Many people assume that nursing homes with a high quality rating will be the first to reach the industry standard goal of 95% occupancy. However, the reality is that many nursing homes with high quality ratings have equally high vacancy rates, and conversely, nursing homes with low quality care may have low vacancy rates. There are many of factors that contribute to vacancy rates in nursing homes. Financial concerns, hospital discharge patterns, facility size and the location of the nursing home can all impact vacancy rates more than actual care quality. Many of today's seniors choose to remain part of their community for as long as possible rather than enter a nursing home.

As a result, the number of home and community-based services has grown steadily over the past decade, further contributing to the rising vacancy rates. Additionally, many states are promoting these alternative services in an effort to cut Medicare and Medicaid spending. For example, the Money Follows the Person program has transitioned thousands of Medicaid-eligible residents into community settings, where they can receive the same quality of care for a much lower price. All of these factors and others have contributed to relatively high vacancy rates in nursing homes across the country.

How nursing homes are coping

Many nursing homes are making drastic changes as a result of this shift in senior lifestyle. They're offering more diverse services, including short-term rehabilitation, transition-to-home stays, and better overall rehabilitation options. They are also focusing on ensuring staff longevity and creating good relationships with hospitals, who in turn send them more short-term patients.

Many nursing homes are making an effort to stand out in their ability to offer more focused and individualized care for each resident, provide upgraded rooms, shift to private rooms and improve their dining services. They've turned to practices that are more convenient and improve quality of life for seniors and their families, including eliminating overhead paging, encouraging the personalization of resident rooms, and offering windows and private entryways, as well as easily accessible private bathrooms. The goal is not only to offer more comfort for residents, but also to change the perception of skilled nursing care for their families, as well.

A look at the future

It's anticipated that by 2025, the number of people needing long-term care will have increased by more than 20%. This will mean a serious drop in the number of available beds in licensed facilities. However, it won't mean that seniors will choose nursing homes over other options. Instead, they'll likely use home and community-based care for as long as possible, and only move into a nursing home once all other possibilities have been exhausted. This will result in a much more frail and weak nursing home clientele, requiring more intensive care.

Research shows that most people over the age of 65 will need around three years of long-term care, while 20% will need five or more years. By 2040, more than 20% of the United States population will be made up of seniors over the age of 65. This means that Medicaid, which is the primary payer for approximately 63% of nursing home residents, and by extension a large portion of a facility's revenue, will need to make serious changes in order to prepare for that population growth.

Clearly, significant changes are expected for the nursing home industry over the next several years. In order to survive the coming population and lifestyle shift, it will be necessary for many nursing homes to make changes to their quality of care, services, and family-friendliness. Changes to Medicaid policy will also be necessary in order for the program to survive. Savvy nursing homes will stay abreast of these changes and keep up with the culture change in order to continue to serve the aging population into the future.

Ben Mandelbaum is chief operating officer of LTC Consulting Services and Senior Planning Services, with offices in New Jersey, New York, Pennsylvania and Connecticut.